Brits to be £10k worse off as state spending set to soar to £1.5trn under Labour

State spending will hit £1.5trillion by 2029-30 as a result of decisions leaving Brits £10,000 worse off, the Centre for Policy Studies has warned.

The think tank co-founded by Margaret Thatcher claims that Sir Keir Starmer's Government is squeezing living standards.

It warns that without a surge in growth the nation faces "a painful, miserable few years". Chancellor has put the country, it claims, on track to become a "high-tax, high-spend nation".

With NHS and social care funding due to pass £200billion, the CPS researchers say this is on a par with the GDP of New Zealand or Greece.

It cautions that unless reforms to the planning system unlock a "growth bonanza" the country faces "another decade of virtual stagnation in living standards".

It says that Labour has "reverted" to the view that the state should direct the economy - and it warns that business investment will be "crowded out" with the Government trying to "pick winners".

The CPS estimates Britons in 2029 will be around £10,000 worse off than they would have been if growth had recovered to levels before the 2008 financial crisis.

Higher borrowing, it states, means a debt crisis before 2029 is a "real possibility".

And its experts are concerned that the hike in employers' national insurance could result in "roughly 52,000 fewer people in work".

Rachel Reeves's Budget included £70 billion in new spending, or around £1,000 for every person in the UK.

That means the government is now spending £18,000 per person every year.

There are three main reasons why this is a bad thing.

Firstly, the larger the state gets, the less efficiently it spends money. We need government to keep us safe and to deliver important services. However, as we can see with the NHS, more money does not automatically deliver better services. In many cases, households and the private sector can invest better than the government.

Secondly, a big government has to tax more. Unfortunately, the way the UK chooses to raise tax is particularly damaging to the economy. The latest rise to employer NICs raises the cost of hiring someone, which makes firms less productive and may lead to them hiring fewer people. But these changes are on top of a tax system that everyday stops people making choices that would make us richer.

Thirdly, a large state racks up debt for our children. While the size of the tax burden is bigger than it has ever been in the history of the UK, it still isn't enough to pay for everything government does.

It costs the UK £1,500 per year per person to simply cover the cost of the interest on our national debt. Not to pay it off, just cover the interest. Higher state spending is a debt being given to future generations, who will face massive tax bills to fund bloated and inefficient government spending.

Ultimately, we get the state we deserve. A swollen public sector that tries to do too much will never be able to deliver on its promises. For the sake of our children's taxes, we need to demand a leaner, cleaner state that can do the things we need it to and let a flourishing private sector do the rest.

Robert Colvile, the think tank's director, said: "This is a Budget which privileges the public sector over the private sector - with the impact on growth that you'd expect from that. The OBR is clear that the Budget will hit private sector activity, which is exactly what you'd expect when you load a £25billion tax rise on to business and employment.

"More worryingly, this Budget significantly accelerates Britain's journey to being a high-tax, high-spend nation, with both tax and spending left at historic highs, on top of uncomfortably large levels of borrowing.

"The Government's best hope is that its planning reforms unleash an unexpected tidal wave of growth and investment, but in its absence we are set for a painful, miserable few years - with a severe pinch point in the third year of the forecast, when the spending taps are turned off, spending discipline tightens significantly under the new fiscal rules, and income tax thresholds at last begin to rise again."